Galaxy S23 Ultra: Hands-On Netflix Password-Sharing Crackdown Super Bowl Ads Apple Earnings Google's Answer to ChatGPT 'Knock at the Cabin' Review 'The Last of Us' Episode 4 Foods for Mental Health
Want CNET to notify you of price drops and the latest stories?
No, thank you

Google saves $2B in taxes by sheltering $10B in revenue in Bermuda

The search and software giant's tax avoidance is being investigated by governments in France, the U.K., Italy, and Australia, Bloomberg reports.

Google avoided about $2 billion in global income taxes last year by shifting $9.8 billion in revenue into a Bermuda shell company, Bloomberg reported.

That level is almost double the total from three years ago, Bloomberg said, citing a November 21 regulatory filing by a Google subsidiary in the Netherlands. And it allowed Google to cut its overall tax rate almost in half.

Google's action -- moving about 80 percent of its total pretax profit from 2011 to tax-free Bermuda -- isn't illegal. On the contrary, many companies have taken similar steps in recent years to avoid paying steep taxes.

Some, like Cisco and Qualcomm, have pushed for tax holidays that would allow them to bring foreign-held cash back to the U.S. at much lower tax rates. They have argued that such holidays would allow them to create more jobs and help the economy, but critics say that's often not true. Instead, companies often institute dividends and other policies to reward investors and executives.

As Bloomberg noted, outrage over corporate tax dodging has been spreading across Europe and the U.S. as the nations grapple with tough economic times. During the recent economic downturn, many companies have been reporting record financial results but paying low amounts of tax.

As a result, Bloomberg noted, governments in France, the U.K., Italy, and Australia are probing Google's tax avoidance as they seek to boost revenue during the tough times.

Just last week, the European Union's executive body, the European Commission, recommended that member states maintain blacklists of tax havens and adopt anti-abuse rules, Bloomberg said. Tax evasion and avoidance costs the EU 1 trillion euros a year, the publication said.

According to Bloomberg, Google's tax rate in 2011 totaled just 3.2 percent on the profit it earned overseas. That amount came even as most of its foreign business was in European countries with corporate taxes of 26 percent to 34 percent.

Its overall effective tax rate dropped to 21 percent last year from about 28 percent in 2008, Bloomberg said, well below the average combined U.S. and state statutory rate of about 39 percent.

Google told Bloomberg that it complies with all tax rules and that its investment in various European countries helps their economies.

We've contacted Google and will update the article when we hear back.